Investment banking covers a range of activities. Such activities include: underwriting, selling, and trading securities (e.g., stocks and bonds), providing financial advisory services such as mergers and acquisition advice, and managing assets. Investment banks offer these services to a variety of clients, both big and small, including, but not limited to, corporations, governments, non-profit institutions, and individuals. In addition, third party brokerage services provide many services similar to investment banks and interface with investment banks in many ways.
In the trading of securities, investment banking generally involves a buy side and a sell side. On the buy side, an investor or client provides the investment bank with an order. Typically the order is to conduct a transaction relating to securities, such as buying a certain amount of said securities. The order is typically placed with a person, such as a broker, trader, or portfolio manager. In many cases, the order is electronically placed over a computer network with the investment bank. The investment bank executes the order following receipt thereof. Depending upon various factors, such as size and price, the order is either be executed manually or executed automatically. Both types of execution typically occur in an appropriate computer based trading system. A delay in the execution of the order is possible. Such delays impact the order because market conditions are volatile. Changes in the market therefore occur from the time the order is placed to the time that the order is actually executed.
A delay in placing the order can have adverse consequences for the order. For example, the price of the security desired to be purchased can change, either up or down, between the time of order receipt and order execution. This is known as price slippage. Further, manually executing orders results in inconsistencies between orders.